Mexican Peso Gains on Draghi Rates Pledge; Bond Yields Increase

Mexico’s peso rose as a pledge from European Central Bank President Mario Draghi to keep rates low eased concern that near-zero borrowing costs in developed nations were set to increase.

The currency climbed 0.3 percent to 12.9148 per U.S. dollar at 4 p.m. in Mexico City, the strongest closing level since June 18. Yields on government bonds maturing in 2024 rose three basis points, or 0.03 percentage point, to 5.85 percent.

The peso rose along with most emerging-market currencies as Draghi said ECB policy makers expect to keep interest rates low for an “extended period.” Global investors have been dumping the country’s debt since May amid speculation the Federal Reserve is poised to taper monetary stimulus that’s helped fuel demand.

“It’s possible that you can expect higher rates in the U.S. in 2014, but it’s still a ways away and just in the U.S.,” Ramon Cordova, a trader at Banco Base SA in San Pedro Garza Garcia, Mexico, said in a telephone interview. “In Europe, there aren’t signs that you’re going to raise rates over that period.”

Markets in the U.S., Mexico’s biggest trading partner, were closed today for that country’s Independence Day holiday.

Before it's here, it's on the Bloomberg Terminal.